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Home Publications Blogs Beat the Press David Brooks: Math is Hard, Just Give Money to Rich People

David Brooks: Math is Hard, Just Give Money to Rich People

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Tuesday, 16 November 2010 05:40

David Brooks complains that liberals used rigorous economic models.

"The economic approach embraced by the most prominent liberals over the past few years is mostly mechanical. The economy is treated like a big machine; the people in it like rational, utility maximizing cogs. The performance of the economic machine can be predicted with quantitative macroeconomic models.

These models can be used to make highly specific projections. If the government borrows $1 and then spends it, it will produce $1.50 worth of economic activity. If the government spends $800 billion on a stimulus package, that will produce 3.5 million in new jobs.

Everything is rigorous. Everything is science."

Brooks contrasts this approach with the moralizing and whining of conservatives:

"Conservatives, who are usually stereotyped as narrow-eyed business-school types, have gone all Oprah-esque in trying to argue against these liberals. If the government borrows trillions of dollars, this will increase public anxiety and uncertainty, the conservatives worry."

He then concludes that because the economy is still weak, we should listen to the conservatives and cut spending and taxes.

Actually, the liberal models have performed quite well if Brooks actually bothered to look. The stimulus was projected to create 3.7 million jobs in its original form. The bill actually approved by Congress contained roughly one-third less stimulus, so we should have expected it to create roughly 2.5 million jobs. No one who looked at the models that Brooks is condemning would have thought that this would have been sufficient to restore the economy to normal levels of output and employment in an economy that had lost over 6 million jobs by the time the stimulus kicked in.

Brooks also misrepresents the attitude of liberal economists to the moralistic conservatives who just want to give all our money to rich people. All of their whining has specific implications. For example, when Brooks or some other conservative complains that businesses aren't hiring because of all the uncertainty about taxes and regulation, then the implication is that businesses are finding ways to meet their demand for labor in ways that don't involve permanent hires.

The obvious mechanisms would be to increase average hours per worker or increase the hiring of temps. Liberal and progressive economists insist on examining the evidence to see whether it supports the whining of the conservatives. In this case (and all others) it doesn't. The increase in hours per worker since the trough last fall has been very modest and average hours are still well below their pre-recession level. Temp employment has rebounded very weakly and is also far below its pre-recession level.

In short, Brooks is not just complaining about the economic models of liberals. He is also complaining that liberals try to examine the logical implications of their whining and look for evidence of these whinings being accurate. Brooks' view is apparently that we just give in to conservatives since this is the only way to get them to stop whining.

 

Comments (16)Add Comment
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written by foosion, November 16, 2010 6:37
The economy is treated like a big machine; the people in it like rational, utility maximizing cogs.

This is a standard critique of conservative economists - University of Chicago, et al. Brooks has picked up the Rove technique of attributing your own issues to your opponents.

The uncertainty story doesn't make any sense, but it's all the rightwingers have.
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written by David, November 16, 2010 7:11
Dean,

You have altered my morning routine. I used to groan every time I read a David Brooks column.

Now, when I see that he is writing about economics, I cannot wait to finish his insipid column so that I can read your perfect-pitch demolition of his nonsense.

Thank you Dean.
Conservatives Approximately Right, Liberals Exactly Wrong
written by izzatzo, November 16, 2010 8:10
In short, Brooks is not just complaining about the economic models of liberals. He is also complaining that liberals try to examine the logical implications of their whining and look for evidence of these whinings being accurate.


Brooks understands the well known principle that conservatives are approximately right compared to liberals who are exactly wrong when it comes to matters like the deficit.

Because liberals are inherently anal retentive like accountants, due to uncertainty and fear of the unknown, they're always asking questions that add up to zero sum answers about the deficit. They can't lead because they can't make decisions beyond this range of pay-me-now-or-pay-me-later thinking.

In contrast, conservatives never cling to their religious models and prediction weapons as noted by the reformed liberal Obama, always looking forward at the big picture, beyond the minutiae of rigorous science with so much detail it blinds one to the larger real world that engulfs and tosses liberals around like so many dice landing randomly on evolutionary outcomes void of divine guidance, driven by satanic chance.

Conservatives don't need and require affirmation of apriori predictions like liberals do, because conservatives understand that when one is up to one's ass in deficit alligators, one does not worry about the flies.

So how's that economic model working for ya you limpy liberal ingrate ... not as good as the one we used to pump up the housing bubble I betcha ...
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written by Parl, November 16, 2010 8:42
I truly love your headline. And by the way - Brooks' mix-up of stereotypes is quite nice actually. Normally it's the left that's accused of being the mushy ones. It's a welcome change to be the cold-hearted realists for once.
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written by diesel, November 16, 2010 9:41
Conservatives, having nothing constructive to offer to the national debate, have taken to penning farce.
nice!
written by David, November 16, 2010 10:04
Time for some tough love with the whining right.
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written by ds, November 16, 2010 10:37
conservative economic models are always right -- they are all fitted ex-post and every economic event is a real shock!
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written by liberal, November 16, 2010 10:51
ds wrote,
they are all fitted ex-post and every economic event is a real shock!


I'm not an economist, but I was telling a friend something like that the other day: my hunch is that RBC general eq models fit well because they take "shocks" as given. Then, all they have to do is fit the data between the shocks, which is possibly not all that hard to do or informative. Anyone able to shed light on that?
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written by liberal, November 16, 2010 10:51
(My point being not that those models fit well, but that they don't actually explain much.)
Obama's Oracle
written by Steve, November 16, 2010 11:10
Of course Obama, for some reason, thinks Brooks is the most important and interesting columnist in existence, and Rahm chatted with him weekly to get his input.

Just one more indication of what is wrong with Obama.
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written by PeonInChief, November 16, 2010 12:01
Hmm, I thought it was the populace that was worried about values--you know, like punctuality. See http://peoninchief.blogspot.co...rooks.html for a recent example. But now it turns out that it's the whining conservatives. Oh, please...

And david, I too look forward to Brooks on economics, so that I can read the morning demolition.
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written by joe, November 16, 2010 1:18
Brooks doesn't care whether he is right. He's disseminating right wing propaganda and he knows it. Conservatives always try to spin the economic problems as a problem with supply because weak supply can be caused by govt being too tough on rich people. The solution is to shift the tax burden to the middle class, cut spending and get rid of laws that protect shareholders and consumers (dump the negative externalities on the middle class).

NFIB polls show the #1 concern is sales, weak demand. In January 06, aprox 10% were concerned with weak sales. Now 30% are concerned with weak sales. That storyline makes perfect since we just came out of a balance sheet recession. Brooks storyline might have some credibility if we were coming out of a recession caused by a supply shock. When was the last time we had one of those? Oil embargo of 73?

http://cr4re.com/charts/chart-images/NFIBBiggestProblemOct2010.jpg
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written by fuller schmidt, November 16, 2010 2:08
Conservatives are devilishly clever: dismantle the social safety net as best they can - before the deficits they cause drive interests rates back to where the good ol' boys can relax and clip 8% coupons. It's a tidy process they've discovered, a real force of nature. They must have loved last night's ABC news that seemed laudatory about China's $1 an hour payscale manufacturing miracle.
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written by Cynthia, November 16, 2010 3:22
Now that I have learned that one of President Obama's most favorite columnists is none other than David Brooks -- one of the biggest brown-nosers for the TBTF banking industry that you'll find in the mainstream media (see first link below), it seems pretty clear to me that the global financial crisis was an insider job, as it does to Robert Reich as well (see second link below). I wouldn't come to this conclusion had the big banks not gotten away with engaging in activities that have fraud and corruption written all over them. And because this op-ed columnist from the New York Times, whom Obama holds in such high regards, is also an unabashed brown-nosers for the military-industrial complex, coupling that with the fact that none of our war criminals have been hauled off to a prison cell in the Hague, I'm also seriously contemplating the possibility that the 9/11 attacks were an insider job as well.

http://www.salon.com/news/politics/war_room/2010/10/26/obama_columnists

http://www.spiegel.de/international/world/0,1518,726575,00.html
Reich wrong?
written by Arne, November 16, 2010 5:19
Why does Reich say "President George W. Bush and, after him, President Obama provided Wall Street with $700 billion"? The bailout bill gave Wall St what it wanted back in Bush's term. The leverage was gone by the time the financial reform bill was passed.
more math
written by ts, November 16, 2010 5:20
While I agree that David Brooks is an idiot, the stimulus bill that was passed didn't actually create jobs. Instead, the economy lost up to 3.7 million less jobs (If I remember correctly, the CBO range was 1.5M to 3.7M) than it would have lost had no stimulus bill passed. And even this is only an estimate with a couple critical assumptions: that the relationship between spending and employment was similar to that in the past (unlikely in a recession, it was probably less), and that the velocity of spending for those who received the stimulus was about the same as the overall economy (also unlikely as a huge chunk of the money went to infrastructure investment.

The basic math of the stimulus was that $787 billion was spend to save 1.5 million to 3.7 million jobs. Even using the high end of the range, it still works out to $200,000+ spent per job. It was a horribly inefficient stimulus package, and would have worked better had we just sent checks out to people (which Bush Jr actually did in 2003 - and which was a stimulus package that actually worked - certainly not a big fan of the guy, but you have to give credit where credit is due).

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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